Steak n Shake same-store sales streak ends after 29 quarters

August 10, 2016

One of the restaurant industry’s longest-running winning streaks has come to an end.

Indianapolis-based Steak n Shake quietly quietly reported Friday that same-store sales in the latest quarter fell, snapping a streak of 29 consecutive quarterly increases dating back to 2009.

The results were contained in the latest earnings report from Biglari Holdings Inc., the San Antonio, Texas-based parent of Steak n Shake.

Overall, Steak n Shake reported $206.8 million in revenue in the second quarter, down from $207.8 million in the same quarter of 2015.

Profit at the 571-restaurant chain was $12.1 million in the latest period, down from $13.8 million last year.

Steak n Shake same-store sales slipped 0.7 percent as customer traffic at those locations fell 2.1 percent. Same-store sales refer to revenue from company-operated units open at least 18 months at the beginning of the quarter.

Almost three-quarters, or 417, of Steak n Shake’s restaurants are company-operated.

Analysts pay close attention to same-store sales because the measure is considered a better indicator of the long-term health of a company's operations.

In a Feb. 18 report to shareholders, Biglari Holdings Chairman Sardar Biglari said Steak n Shake’s same-store sales had been on the rise since 2009 primarily because of increasing customer traffic.

Biglari Holdings bought the restaurant chain in 2008 and launched a discount-pricing strategy credited with reviving the business.

“The prime reason Steak n Shake’s unit-level performance has been improving is that unit-level customer traffic has been on the ascendency for the past seven years, with a cumulative increase of about 40 percent,” Biglari wrote. “Viewing all company-operated units as a single, united, gigantic store, we served 85 million patrons in 2008, yet in 2015 we served 118 million customers.  In other words, 33 million additional customers  (some  of  whom  were  repeats)  went  through  the  same  four  walls  in  2015,  compared  to those in 2008.”

The only other major restaurant chain to put together a similar same-store sales streak in recent years was Chipotle Mexican Grill Inc. Chipotle’s streak lasted nine years before a food-safety crisis ended it in the fourth quarter of 2015.

Restaurant analysts say recent Steak n Shake traffic might have taken a slight hit from a rash of other burger chains that have rolled out discount meals.

Industry-wide same-store sales also appeared to weaken in the quarter, as several chains reported earnings that failed to meet expectations.

Most of Biglari Holding’s revenue is derived from Steak n Shake. The holding company reported profit of $37.5 million in the latest quarter on revenue of $219.1 million.

Biglari shares traded at $422 each Wednesday morning, up nearly 30 percent this year.



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